THINGS TO CONSIDER WHEN
BUYING A HOME
SPRING 2021
EDITION
Buying a Home This Spring The housing market recovery has been nothing short of remarkable. Many experts agree the turnaround from the nation’s economic pause last year is playing out extremely well for real estate, so it’s an ideal time to buy a home for those who are ready to make a purchase. Here’s a dive into some of the biggest wins for homebuyers this spring. 1. Mortgage Rates Are Still Low In 2020, mortgage rates hit all-time lows 16 times, falling below 3% for the first time ever. Continued low rates in the early part of this year are setting buyers up for significant long-term gains. According to Freddie Mac: “Optimism continues as the economy slowly regains its footing, thus affecting mortgage rates. Though rates continue to rise, they remain near historic lows.” Essentially, it’s less expensive to borrow money for a home loan today while rates are low. This is a huge opportunity for buyers to capitalize on right now. 2. Buying Is More Affordable Than Renting This trend of low mortgage rates has made the typical monthly payment (including principal and interest) less expensive for buyers. According to Odeta Kushi, Deputy Chief Economist for First American: “The low mortgage rates and income growth spurred an 18.9 percent increase in housebuying power compared with a year ago.” Buying a home now versus renting one may be a game-changer as it amplifies long-term savings for homeowners. When paying a mortgage as opposed to paying rent, that money is reinvested back in your favor, so you’re contributing to your own net worth when you own a home. This is a term called equity, and it’s one of the biggest financial benefits of homeownership. 3
3. Equity Is Growing The Homeowner Equity Report from CoreLogic notes that the average homeowner gained $17,000 in equity in just the last year. With equity growing so significantly, you can feel confident that homeownership is a sound investment in your future.
Homeowner Equity Gains over the Last Year
4. Home Prices Are Appreciating According to many leading experts, home prices are forecasted to continue appreciating this year. When home values appreciate, it’s another factor that increases your equity. According to Lawrence Yun, Chief Economist for the National Association of Realtors (NAR): “The housing market was a spectacular surprise in 2020—and the positive trend will continue this year. Home sales in 2021 are expected to rise by around 10%. Home prices will also climb, but I expect more moderate increases than we’ve seen, a break for first-time buyers. Mortgage rates will continue to be favorable, staying at or near historic lows of 3% on average. The labor market will strengthen, especially as vaccines become widely available and life moves toward normal.” Knowing home values are increasing while mortgage rates are so low should help you feel confident that buying a home this year is advantageous from a price perspective and a strong long-term investment. Bottom Line If you’re considering buying a home, this may be your moment, especially with today’s low mortgage rates. Let’s connect to assess your changing needs and set you up for success in the homebuying process. 4
Owning a Home Is Still More Affordable Than Renting One If spending more time at home over the past year is making you think hard about buying instead of renting, you’re not alone. You may, however, be wondering if the dollars and cents add up in your favor as home prices continue to rise. According to the experts, in many cases, it’s still more affordable to buy a home than to rent one. Here’s why. ATTOM Data Solutions recently released the 2021 Rental Affordability Report, which states: “Owning a median-priced three-bedroom home is more affordable than renting a threebedroom property in 572, or 63 percent of the 915 U.S. counties analyzed for the report. That has happened even though median home prices have increased more than average rents over the past year in 83 percent of those counties and have risen more than wages in almost two-thirds of the nation.” How is this possible? The answer: historically-low mortgage interest rates. Todd Teta, Chief Product Officer with ATTOM Data Solutions, explains: “Home-prices are rising faster than rents and wages in the majority of the country. Yet, home ownership is still more affordable, as amazingly low mortgage rates that dropped below 3 percent are helping to keep the cost of rising home prices in check.” These low rates are a big factor in driving affordability. Teta also notes: “But it shows how both the cost of renting has been relatively high compared to the cost of ownership and how declining interest rates are having a notable impact on the housing market and home ownership. The coming year is totally uncertain, amid so many questions connected to the Coronavirus pandemic and the broader economy. But right now, owning a home still appears to be a financially-sound choice for those who can afford it.” Bottom Line If you’re considering buying a home this year, let’s connect today to discuss the options that match your budget while affordability is in your favor. 11
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Do I Really Need a 20% Down Payment? Is the idea of saving for a down payment holding you back from buying a home right now? You may be eager to take advantage of today’s low mortgage rates, but the thought of providing a large down payment might make you want to pump the brakes. Today, there’s still a common myth that you need to come up with 20% of the total sale price for your down payment. This means people who could buy a home may be putting their plans on hold because they don’t have that much in the bank yet. The reality is – whether it’s your first home or you’ve purchased one before – you most likely don’t need a 20% down payment. Here’s why. According to Freddie Mac: “The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.” If saving that much money sounds daunting, potential homebuyers might give up on the dream of homeownership before they even begin – but they don’t have to. The 2020 Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) notes how the median down payment hasn’t been over 20% since 2005, and even then, that was only for repeat buyers, not first-time homebuyers. 14
CONTACT ME TO TALK MORE I'm sure you have questions and concerns about the real estate process. I'd love to talk with you about what you read here and help you on the path to selling your house. My contact information is below and I look forward to hearing from you.
Lee Crossley Sales Manager Jaqua Realtors
Lorene Taylor
REALTOR® Lorene@JaquaRealtors.com (269) 760-2496
LCrossley@JaquaRealtors.com (269) 998-0123
12374 E D Avenue Richland, MI 49083